Penske Automotive (PAG) 26 Oct 222022 Q3 Earnings call transcript

Company Profile

Participants

Anthony Pordon	Executive Vice President, Investor Relations & Corporate Development
Roger Penske	Chair & Chief Executive Officer
Shelley Hulgrave	Executive Vice President & Chief Financial Officer
Tony Facione	Vice President & Corporate Controller
John Murphy	Bank of America
Michael Ward	Benchmark
Daniel Imbro	Stephens, Inc
Rajat Gupta	JPMorgan
David Whiston	Morningstar

Call transcript

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Operator

Good afternoon. Welcome to the Penske Automotive Group Third Quarter 2022 Earnings Conference Call. Today's call is being recorded and will be available for replay approximately one hour after completion through November 2, 2022, on the Company's website under the Investors tab at www.penskeautomotive.com. I will now introduce Anthony Pordon, the Company's Executive Vice President of Investor Relations and Corporate Development. Sir, please go ahead.

Anthony Pordon

Hanna. you, Thank and everyone, for us joining Good thank today. afternoon, you on detailing A this record posted understanding with the Penske you third to release presentation morning website, designed the quarter is Company's issued Group's in was Automotive press assist along results XXXX and results. our financial

e-mail phone any I'm questions follow-up always, As or you available by for may have.

and and Facione, call Chair and Controller. Hulgrave, EVP Joining our our CEO; Tony and President Penske, me Chief are for Officer; Roger Corporate today's Vice Financial Shelley

Our liquidity and discussion before ratio. forward-looking earnings financial include our leverage may statements about outlook, future non-GAAP our potential, EBITDA as today may of interest, We operations, taxes, events, and conditions. certain such earnings growth business depreciation discuss plans, and also measures, or assessment amortization

and the presented the comparable and investor prominently the reconciled in morning's on measures available most to are GAAP comparable our press have this have website directly presentation, release measures non-GAAP measures. We GAAP which

may direct risks the actual results because filings, cause differ from materially actual of to to may outlined I our expectations. and in press including SEC which results vary Our you today's release, our uncertainties Form and factors could At discussion Penske. Roger results additional Form previously that to materially. would XX-Qs this call to and differ now I to over XX-K cause time, like filed the for turn

Roger Penske

per joining Good Tony earnings all the I'm in today. us for diversified to quarter, afternoon, business pleased by you, record which you our model. Thank and share everyone. of was third report revenue and driven

share to $XXX million EBT increased X% per $XXX X% net $X.X and income billion, to X% Earnings $X.XX. declined X% to increased decreased revenue Our million. to

foreign were results quarter exchange. third negatively impacted by Our

decreased $X.XX. increased net $X.X and to $XXX to revenue per X% X% share income increased billion, FX, EBT to to earnings our $XXX, million, increased XX% X% Excluding

Retail new new supply QX Looking as for to inventory Automotive constraints continue impact 'XX declined same-store basis units a saw operations 'XX, QX availability. our on X% at versus we

to to at for remain the supply the expect these next levels X months. XX current We general

vehicles new However, sold. vehicles demand for remains of and our remains forward pipeline strong,

the higher profit. the example, largely Retail to units time acquiring represents forward expectations. units million our the gross of bank declined X%. order was and declined last it XX,XXX XX%, affordable over year to XX% For due worth same Used in and challenges meet automotive U.K., is inventory in revenue $XXX than customer

FX, our gross exclude we profit to increased unit when Variable per However, increased X%. revenue $X,XXX. $XX

If increased year. you of exclude the last $XXX the third profit gross FX, quarter variable from

customer and parts Our pay service X% increased and warranty. by revenue both in increases driven

and parts revenue XX%. increased However, service excluding FX

implemented unit gross during Looking third and per quarter, a improving prices, costs at market the reconditioning we've execution same-store structure. on On profitability revenue In and CarShop $XXX sales impact response profit basis, CarShop to conditions, at the our improvement $X,XXX. logistics was focused our current and retail program variable continue Vehicle CarShop. acquisition retail to sales was our cost unit were cost XX,XXX million. overall

turn now Truck me Commercial business. to Let Retail dealership our

business PAG. advantage dealership remains an diversification part strong. important know, our premier business the represents you truck of for and strategic As a It's

and sales During unit the unit to increased total XX% third quarter, X,XXX increased sales XX%. same-store

fixed XX% quarter. Approximately costs X% sales EBT and and in the increased to commercial are trucks. Class profit XX%, parts million. revenue increased increase to the new including of XX% revenue a increased $XX third gross million. all $XXX covered and Our unit Same-store our XX% in billion X XX% of increased our to represented and XX% to profit of service XX% gross total XXX% business. $X our parts of Service

low. industry X out. XXX,XXX truck new backlog strong units of the XX, product XXXX Class for entire The rates sold fact, is September allocation as very remain and and our X In remains of market Class has the cancellation

third the units XX% for forecasting in retail almost and 'XX North approximately of quarter, XXX,XXX increased XXX,XXX XXXX. units, to American XX,XXX sales sales currently During

own to which various trucks by received with currently driven tractors increased Transportation demands with PTS by increasing in and currently to profit of business, record PTS, leasing, Penske million has a and cash increased the from million, order its and XX% revenue $XXX to rental from to customer over $XXX we increased Turning provides fleet equity XXX,XXX operates quarter XX.X% third trailers business commercial Solutions, In and produced million. our meet distributions of distributions XX% fleet record goal and PTS. full-service over XXXX. we XX,XXX cash and across year-to-date, XXX,XXX areas. us earnings a to $XXX equity in XX% of its savings. strong performance expected $X.X PTS income, trucks remarketing, PTS the quarter, logistics billion, to cash

now Let the call Hulgrave, Shelley our Shelley? me Financial turn over to Chief Officer.

Shelley Hulgrave

everyone. afternoon, Good Roger. you, Thank

achieved indicated, third when the cost higher year through of strong to the we in gross XXXX. basis by quarter to in in SG&A in XX% another maintain As only XX.X% to had commitment diversification sequentially profit compared beginning the Roger points XX.X% reductions quarter, and the driven our third last to was efficiencies XXXX. XX was operational quarter compared quarter and our second

XXs, period of we low gross pandemic. basis, in prior same than As be through EBITDA SG&A is look year. in to future, the the billion $X.X an Year-to-date, reached compared of On EBITDA, lower of expect we billion profit a the last to September XX-month $X.X we which to XX% significantly when representing XX. the increase ratio generated trailing to the to

annual $X.X for open we acquired five Mercedes-Benz of from annualized points, the year, in locations So U.K. revenue the approximately September. billion and dealerships after million sales far and three this we XXXX acquisitions have $XXX completed in in revenue, including new representing

Year-to-date of repurchased of $XXX stock the October shares XXX,XXX X.X employees quarter, million During XX, from we for $XX.X million. and million. acquired for repurchased we have through third million shares for X.X stock $XXX million common shares

the October, Directors increased to million, the than an were delegated total beginning the authority of more to bringing X% our repurchased year. the of shares available at management outstanding to outstanding We repurchase by securities million. authority Board that additional $XXX the repurchase our have In $XXX of

share repurchases, our net dividend to have our $XXX XX, XX% in to representing far per paid in $XXX so dividend four XX% to growing our returned Through times we the $X.XX quarterly have dividends the addition In million we million September Board increased share. has this income. year shareholders In to total, of shareholders. XXXX,

and have future We $XX CapEx an on million for land million $XXX growth. spent additional acquisitions also on

mortgages September, our was $X.X capital you growth investments shareholder end long-term for our As lines, and future At the our allocation properties $XXX debt an of strategy December of long-term representing debt million. can approximately when to to increase disciplined million on in see, The of billion, of increase each compared an of related XX acquisitions business increase in includes last in $XXX return. year. is

X.Xx which XX total of sits X.X%, consistent to the XX% is XXXX. interest Our debt rate at on at secured billion, September, our At we fixed. with of the This consistent is of the total September. term XX% $X.X fixed is rate and December capitalization remaining The last average end for have years. which inventory end is average year. X.X leverage with was total of end Debt an debt is of

foreign this of vehicle is U.S. domestic in at balance to had We our Used supply new September In XX, is XX with volume XX in supply. ability U.K. I a XX Roger. at in at premium over We time, days sheet the XX-day in billion shape. million and vehicles had XX. XX-day confident may $XX conclusion, the in the At days and to At great and vehicle remain supply our had inventory New a turn cash macro in that the call XX, manage liquidity. we challenges $X.X ahead. will over lie back through

Roger Penske

Thanks, Shelley.

automated service our providing mentioned, interactions customer artificial more conversational appointments Shelley and natural customers cost AI basic for allows The useful to with and We're our we're and our what using committed we That particularly service to quality a and lead will employees support operational efficient believe language. in to efficiencies, sales be after intelligence sales sides of allows hours. inquiries As piloting to set businesses. structure. answer also implementing lower both

while solutions control. to quality streamline continue at to and processing, compliance consistency, integrate digital We dealerships ensuring and automate

We in also our programs X% In preferred on our total of and by unit U.K. site digital represented pursue OEM purchase the digital our our proprietary sales. focusing program, sales continue QX, approximately to digital sales

Looking at sustainability.

initiatives of are as our Our part important new strategy.

team As important drive mentioned previously, our built to future a we've this dedicated on efforts responsibility.

reporting. future on and solid for focused to are baseline efforts Our establish monitoring a measurement

certified also We facilities across sustainable and efforts decarbonization focused lead to be our are businesses. on specific

also focused recycling with emissions. over the gas stations life are our to In improving OEM supply of use management, cycle. charging energy working electric to our at to renewable sale installed service energy, fact, network. the infrastructure across programs our greenhouse We're an reduce build location of X,XXX partners vehicles their throughout and We've increasing on we

results reflect, our in I model people operator call it forward. Our drive results joining I work them continue our best to see continue that the to Thanks personally questions. dedication of want to all the I And businesses for. continuing to for the turn about our to back today. remain for company. of the produce that shareholders make thank for our think, record business I the of our of one I'll this the time, business At confident and for opportunities the to

Operator

Please line the proceed. Murphy with first The of question Instructions] of [Operator Bank America. from John is

John Murphy

Thanks info here. the all for

question for be fears, going Are from positive X there's inventory what mean, they're it you your is I that vehicle a somewhat high? months. of paradigm, investors, a massive long but stay how tight short the just to in lot I'm And also that on of biggest run XX next First to seems expect one think relatively we in indicated you grosses. is new a to to get as view curious, I a the we the be Roger, here new

on for that mean But probably would that that time. grosses? relatively So and what normalize period I they what's stay normalize would view of do high at? do gross your they indicate When is

Roger Penske

are position, John, let's where now. Well, we

back FX, -- on sequentially, the at -- we're were 'XX, $X,XXX. third we And of quarter we're If $X,XXX. to you about or we $X,XXX exclude go if sequentially, now, at new

really So, deterioration. we've seen any not

with QX 'XX backlog, I back fact, would the it, In talked U.K. units. the order about the look obviously, When QX, was at or and at I $X,XXX. we XX,XXX call $X,XXX

our in in see from next think the about the you in throughout U.S. see these of consistent premium customers. supply cycle when probably 'XX, when still that what day are quarters. brands. units day luxury the first 'XX, especially today half XXXX. also All here quarter back back issues on have talked orders, us probably. into result about, that really And bespoke the go with inventories short that three continue, into Shelley for strong And did the in And first supply it, shortages and and we new We chain supply Microchip go our today. certainly, really being the as of and only all our 'XX, you our gives across X,XXX supply we we

Anthony Pordon

have We XX,XXX about .

Roger Penske

time. think this XX,XXX. X,XXX so we And or had at last I year X,XXX

And here of make as really, gross us, the So help luxury, of with XX% maintain benefit months we perspective, next a I the as basically, margin the the getting of the us news and shown a from cars really day, for on. higher mix premium, gross through our margin with the big XX cars will they inventory money at we're go us they're that premium being quarters. have to is I the critical. higher-priced last the end to couple think most for And X think we in those good a the building

John Murphy

do but grosses tough, trend a sort and away, of listen, But or years would three and now." a some there, been huge of then just there's right number don't you and you depressed going might a reinvest at a of for recover two, players optimist things bit right acquisitions?" there How may say, significantly. how worse now? question also, used shortage about, There's that volumes an how new around shortage near-term the openings I structural to this get say, are and point, and volume because invest over opportunity pretty of mean, And and to think take second skeptic even either organic grosses sales the do run you mean, share maybe opportunity think sort might one, have helpful. business about is the market as years. an "Hey, lot there a vehicles. a a how That's through is time? vehicle there out, opportunity that of or depressed I be Obviously, four back will "hey,

Roger Penske

Well, let's in buckets. two it look at

have of at the impacted in of used the That anywhere premium are last has to number XX OEM getting out business. from ways. XX%. We one, Let's the being People number run their We're months. side, a not the the we trade. look over dropped business, Number first, XX% cars. on car a buying leases. We're really

loaner So go a homework that's 'XX, first did six back months XXXX, I little had at we in a low year. bit significant cars in the call. impact. months And before six did And the if this the look six cars not mileage turned we West, in last just and months of the used we of X,XXX into have used cars, or the first

to vehicles we're for on out So from gone really and significant then the we that from vehicles we and is get ones availability. there, really significant. vehicles. six And and what reconditioning down has of maybe we've to not a if What impact those to the have the good pay finding going cost auctions at zero years five are four on

I been And think second spot the the then to getting customer the really just leads of have U.S. we've our up We of out brand your both because have and moved not we it moved policy. the more the and would those CarShop, hurts and we're more happening. $X,XXX be cost what's from in bucket buybacks sale our and has cars. U.K., sweet anywhere on don't base because $X,XXX

cost. to to them cars that So to we them. lower moved rebuild find those sell have or we just down we MSRP again And

So we're say a enough juncture we somewhat can't vehicles. at and get

them them and yet our buy recondition for them order to not they're base, back. and have to We in have make salable durable customer to we

be many car up on XX,XXX we've we'll So the what our that's to service, not at locations, in we've to in for AI really think their U.K., think business. I got going very technology in cases. given -- helping the the us us the is and turned area. CarShop, year we And handle have it's used meet We've part a set ago. the some is we because key a do critical to handle working to again, certainly best will that the customer certainly great got done of that we goals appointments, not business, But business we the of we've people

don't this affordability. But point, availability, positive we're be to So going value our brand it. to say, to about damage I would we want And again, by we zero- sure at downstream vehicles. eight-year

John Murphy

to to follow-up, from the expand a opportunity think be some the the you just folks to and sorry, the do base I'm you're business there pressure it? financial might getting resources be cash have under store not there an other and after and rest might the acquisitions make go of as flow

Roger Penske

Well, we we have two that land locations, on. or we've really three that purchased build can

of locations months. point, open to us. at are We're they to But this over two one we've next the are say here open next to kind those the moment over fact, build be the to XX locations happens months, can tapped in that wide we have locations But to we're certainly the would or that forward. go up. we on completed what back few going at see off. the not almost XX or In U.K. we brakes four going five it not But

Operator

is with from Michael question proceed. Ward next The Benchmark. the of Please line

Michael Ward

luxury, is you a slip? in imports versus going the that to are XX% you maybe of little those And looks of like marketplace talk on the strong, and luxury concern and strong, there... Or brands. are bit about -- just over that's to it's consumer, obviously, your in the different continuing because some where chart in on particular? XX% both some are Maybe mix, consumer Slide bit What the U.S. a volume other things of the to the just seeing those in or pricing and that orders buyers German the U.K. to Can little What be all in more there's a brand versus effects? it shows dive it in a XX, dive premium

Roger Penske

Well, let's and on units premium of U.K., the just margins. XX,XXX there very our good business take we got luxury, XX% with is preorder

this a at we it. look point, not very So we've at when cancellations deterioration, few seen

technology premium line, customer and affordable. the the I be obviously, think made it's side. good again, U.S. certainly the on that So their going This in goes overall, I luxury is was the business higher think Mercedes comment the how there. based even to quality morning, a

here days. days So we at look it's luxury the you when at again, U.S. XX look when supply, premium XX in days our really is new, And

from all I as I again, have important charging these go and again, the on customer. we're a we have stores, We've big our MSRP, right XX XX almost think the right BMW for the Porsche our of stores list is And in the So not which a price market player dealing we forward. total premium Mercedes vehicles. over beginning. a think, business. these XX And And customers But shares when were you with think mix. we're we've have definitely that got basis U.K., want just been I or XX% we worldwide premium with

Tony Facione

with brands little a luxury longer in consumer Usually, more to resilient this cycle, those that tends is for Mike, too, purchasing the be brands, too. premium Tony. those

mix brand So, in spot. we a think is good our really

Roger Penske

has pocket. coming offset Well, buy leasing. We to talked about company That of Finance finance Mercedes. his they'll and also, BMW the with cash got and that back, gone the because benefit Tony, the bit of residual at lease we of a customer in little some

play leasing as becomes into we've think our more offense great of there market a go got I customer. mainstream a premium we for as back the

Michael Ward

U.K. the in you made a acquisition the the Mercedes? talk you Can with bit about little

Roger Penske

opportunity. great It's Yes. a

factory those. they the know, made name basis the in divest you stores has Europe. of if decision on the [Neater a worldwide And is Mercedes Lawson] call to As

London five service So able centers, large to into and glove it purchase dealer there. fits we've got because fits locations Northwest of our three big we were the Audi in and negotiate a right,

London, Rover Jag Land in store. have also and -- We we North our have

of So made And very $XXX what really we're group. that will Sytner it's had to put from the that doing, important we're one being acquisition it And in it's we've big million we've I generate think actually since the able largest those Shelley, right, beginning. revenue.

Shelley Hulgrave

right. That's

Roger Penske

the in U.K. Yes,

sites about airport excited the pretty the one So we're me, to from is world-class. And coming that. in the amazing. MX on are The

gives real in to a us it grow So brand. opportunity that

Michael Ward

the the acquisition Are multiples apples-to-apples with or...? paid U.S.

Roger Penske

a are lot lot there veterans. Well, in of of U.S. a veterans the

Operator

Your next Imbro question Inc. from Daniel is with Please Stephens, proceed.

Daniel Imbro

want PTS utilize side was upside of outlook lot it because I way kind how nice and I would that, fourth that one guess, a Can then there's the moving for you has versus and Obviously, into quarter surprisingly moving to PTS on just but what kind and the slower about move parts talk how there, business? consensus. the strong, of driving within you start but for business. XXXX of slowed, of capacity you your is the

Roger Penske

to customers their five-year XX%. on to equipment, contract individual XX% we three-, go And and and annual was billion, that's economic about billion and an million think $X basis. talked of full I record EBT, XX%. escalators was $X.X four-, you business service biggest revenue our the leasing And up portion on make it's the we the product Well, $XXX lines, up an of up that's all-time into with

that's million, Coca-Cola it, and comes businesses need extras our that rental example up was more and customer XX% and their revenue from as because about was be they you needs Our go think look rental need lease would of when I XX,XXX summer. that that down, more guess. trucks commercial $XXX revenue, change, half in up commercial anyhow, batteries our units we at rental we fleet. the guys it. on the the were to winter, at side, We've in as XX%. about at utilization Think The going But got battery

size in on competitor our fleet our and biggest almost And are almost of marketplace, business. with the Xx day, this units it we're you every rent. compare the rental So XX,XXX to

really that's the of because given have earlier. for have the rent, the pricing And leave us cities us, Rent terrific because problems. in moving best have it But key. reputation which consumer is people not and They to with obviously business. are it now we Chicago, equipment. one-way This that's Detroit now the had as a some it equipment well, down is out. we in I moved the people capital slowed So with right of you jump much that's is the think mentioned there

that seen we've So go down.

very units take our because one a hand, markets, we'll other that slowed in some to proven the progress that we've Logistics use And would the for we rental good has us up by think up commercial been And of logistics I side bucket our into that our daily on those way, some we fish really those was rentals that to and the great also, as have way line. normally business. on housing rental business. On have has consumer in that XX%. made one-way help in very, our which

up on course, thing the several are up, is But logistics this about from is to think over built is we utilization XXX,XXX service us going XXX,XXX full good. the -- is have for rental, months. and few real last fleet So we of

the years. remarketing trucks And to I gains. sell more think have that four be next over going able to or also driving three the We we're that's

sale Our million our gain sale increase from piece and of on million. was of $XX up million, about PHE that $XXX was at $XX

gross per key. to sell unit, I have think that's units don't Now When bigger look, market. company, again, to I But because get grown obviously, it's we a same that know. hot and we'll a truck more we've

got we people. XX,XXX control We've got locations XXX that XXX%. So we

that We businesses. have about our X,XXX of some rental agents handle

Shelley, great the got say to We've the might as something, PTS. the about from from you get benefit strong. we And management there. we the basis I a So that to forward, me, go benefit think team tax brand is want

Shelley Hulgrave

Sure.

year. this Roger as cash So far we've mentioned, $XXX received distributions million in so

of trailers We tax that are trucks as and amount a savings operation. also result those in considerable a of cash get all of

that over those -- year, So, have order. partnership. they as a on over capital, here flows depreciation returns over through XX,XXX trucks spend as that this tax And our they -- XXX,XXX XXX,XXX

and So lot cash we're take our of of on savings that advantage able well. to side tax defer as a

Daniel Imbro

Okay. all side potentially color. some quarter, for business. of the the Roger, follow-up, one the wanted headlines to SEC down Great. on Obviously, around a on cracking that Appreciate just the ask I then F&I And during side of so or industry. about are, the the you from just broader proposed Can you what from seen risks talk could that for the business think what a be your far you've the bit industry legislation?

Roger Penske

Well, been is profit deal. race What to the I to this we I you that. be the elimination didn't the kind business when this of F&I guess want in about only first rules. is fully I've be Really, in proposed unfair want of per deceptive are that practices. not think I gross support these

any think reserve product. the same. I finance But and feel from XX% -- comes would my at our XX% about of we're comes also running peers of our from

in we be to are disclosure me, it goes I have leases. us being lease big three to those to a leasing, going sell two- or To through. a customer player typically because with it's again, don't if a think So lot

point, So this our particular I government up better. clean think for subject, to makes to says what sure. only but got It I think we've you it's -- industry the practices have on at this the see

Daniel Imbro

guys? you you think where you that Or too a to practices. is for guys, doing know? are maybe it not still big the risk as early you for as Is much But financial there

Roger Penske

what think, know, to do Tony? you early Too

Tony Facione

They're proposed to too I rules. just know. actually, think it's I early

what So it's of would to on will too in any be Daniel. and of hard the the final have rules that speculate us, impact adoption terms

Roger Penske

that But to understand I of know old you a a affect had payment, the a I us have They for there's you does the of disclosure, how a of think transparency, payment to there's vehicle business. just car. so that. we paid And merit In what having gave complete the a lot from true and think the you book. standpoint days, you price

better our to continue And to to certainly business customer. think long So a we we make need transparent and come more I way. our

Anthony Pordon

transaction. have a process upfront the think I as that the to too, U.S., sign part a that stores we presented customer have And other today. that, in with the digital have docuPAD Roger, we the is of everything is across all everything which they and is And

advantage adopted. we I an So think these new as there that there potentially be as an -- rules have have advantage may

Roger Penske

our you are at When our world-class. Google look scores, stores Google

think from we from a low And very, those right salespeople. and too, standpoint, got reasons message have with very one I is people, delivering turnover again, right a customer. turnover to they've our So they're of because the the the

Operator

The the with line Rajat Please JPMorgan. Gupta proceed. next from question is of

Rajat Gupta

me hear you okay? Do

Roger Penske

hear you I Yes, fine.

Rajat Gupta

Great.

you and about if automation. whatever do starts consumer? bit the Company back that Just metrics supply scenes how doing, how time force tie that's share that And to AI and you improving share the the on And these as And little if updated you like could productivity. transaction maybe of to some earlier SG&A, on initiatives behind you're productivity could any new back inventory on just do the store? level -- like or come starts look used Anything of GPUs into around SG&A around build would at sustaining should for speed to for the you Also, you up store think a could mentioned or the levels, just back go Company? sales what productivity productivity some we the to pre-pandemic draw line, further? a levels, just and gross all

Roger Penske

complicated do best. Well, let that's me -- try to my I'll question. a

and we've made and consistent are we increase at talked before, pre-pandemic that we've we looking I Okay. today, think perspective, and year-over-year, From a about a quite sequentially. where GP look quarter-to-quarter

$X,XXX. Murphy, John I think earlier, we're said I As over the

we some has all see it's at and I again, going -- level perspective, to that, there that by dealer in supply -- from all past, it's the XX% as SG&A So place be the think out driven that's I learning to taken we I our be been, think, operate and get And going shorter our SG&A XX% it see manufacturers. -- dealer Toyota an help us at it like we took sure. vehicles And a XX%. supply, look same-store we normalization, for when out inventory. with is And to our important inventories lower. today. XX% note of previously, And between having turnover to with pre-pandemic. maintain going was businesses much think should to And I don't the XXX,XXX certainly it's and somewhere manufacturers you're a in of

think what that's that's seeing. -- So I we're really

coming If last and that's it just out months, not in million, see COVID you have really people. up increase back we that you coming competitive can't probably -- of there here cars, sequentially it the people we about very the get out personnel. every we've had seen at can't really over work, -- to we it's day. basically We're and look three we're It's get $XX

important it's individuals and what part a is of we're from competitive we're So our very paying inflation, that obviously, that. paying standpoint of all of the

look get utilities at up our got traveling estate. some. real you our other that in people really, up, rent the we've course, cars, and now. got that that's are costs, really our we We is some of of and talked If We -- policy buyback some

at good about what and now, about. It's I really posting XX% and XX%. to SG&A, you stores. looking service And appointments. today about think be subject scheduling OEMs. really availability it this when for driven GP the it's really and This basically at by pushing AI, we've will talk done a again, by virtual we're to talk So really XX And

appointment is tool and minute, a implemented. with if to the a year. can have calls tool book which several it so key the really, the answer on that don't us a all seen virtual We can Internet XXX sales And inbound is think wanted customer it's at process, e-mail, calls, stores by will night the for whether team And days customer in our the AI -- And think the a I in I leads, outbound appointments in are working. really over where written a the people. respond appointments. roll it's across we we'll try to always next we And to or months. is and morning, going XX can cases, to the stores and use which text either country communication store. within In service an So, XXxX two-way increased also an gives four via the a it's we're lead, calls submit to at it the then again, live schedule these then you engage out place available we've or

X, We'll these that trying live certainly things do. X, we've can event for the it vehicles. with be forces I I we're So And we've to of this a gone specific. say, us as the XX for think response as months, that salespeople We benefit are sales XX XX said, at through stores. to probably have gone our selling XX gives it last time period

Now they're XX, XX and XX.

yield So the our salespeople of is better. certainly

Shelley Hulgrave

but have in Yes. just automation surface, to improve U.S. of lot the a an in of part efficiencies back. are through And U.K. the and and scratching the automation, certainly the front standpoint, we working the from our we opportunities both business in

consistency also standpoint us helps helps it certainly to well. from costs, but compliance as as a it standpoint mentioned, and and a you So efficiency improve our our

So further area. to in we continue make look investments to that

Anthony Pordon

a opportunity for It's us. huge

Shelley Hulgrave

It really is.

Rajat Gupta

That's it. Got helpful.

pace term buyback on still thoughts one a allocation. your for and of Is X% you strong, in The the Company. us near been pretty greatest give capital the there? to XX% has reduced. priority Any that. that number Curious on if could Just follow-up float the latest updated

Roger Penske

me. that I'll let on Shelley for answer

Shelley Hulgrave

Roger. Thanks,

as EBITDA hit XX-month billion time trailing the mentioned, first I in $X September here. for in we So

about of we So lot a Rajat. have But being priorities, balanced. all it's

of in roughly last how and our If return spent terms allocation growth shareholders. the it's to years, couple XX-XX you capital look at we've over of

As Mercedes-Benz grown dealerships, path. diversified and acquisition just the our we grow and made Roger the largest to we've continue U.K. with our in we on mentioned,

acquisitions I on for in would auto far, our and $XXX to future be our significant But is to and continue We've return we next XX% like to EV the internationally returning look made manufacturing standpoint average over continue so made we that shareholders. growth, for talked both certainly requirements, about return-to-shareholders shareholder customers, IT XX% a those to strong, excellent land acquisitions and million almost spend in returns. standpoint, From years we've domestically. year-to-date providing few development. remain And So CI our $XXX from on side, both approximately supporting we manufacturer development, truck. CapEx million and a

Rajat Gupta

you have adjusting you're just make it. maybe today leases, today on leverage agencies? that. still turns the can to bonds within follow-up how for sure And Got on add you of Based just the the more rating many

Shelley Hulgrave

Yes.

at our with Xx, could to adjusted up the -- ended lease So push quarter at our rating, we current and we X.X.

So other we as leverage and standpoint certainly well. from debt have ample covenants room a there our from

market for for where past and we've spot, of an just it's is take right that. certainly the So time. when now, liquidity, the right EBITDA But in at, the this we urgency advantage bond and higher our right at our the lot between it's not been could opportunity us a in

Anthony Pordon

fixed we debt of now, And too, at right have our rates, XX%

Roger Penske

I to safe the as secure some take into and buy. think, Company. We started we we've be our looking said, it. of COVID of and Rajat, cost I at these about let's want and what the got were we to talked is of leverage businesses out options

go billion debt, of if working our almost out we've capital. you So back XX XX of $X got months, to out

me, great out So love and -- the we're of finance we only companies that bonds at which million to they mortgages, had we're Really in end quarter really was debt the of the worth they the that using we're of support business, OEMs in that. us the shape. $XXX

just a hours. windshield. really available. power it's even I trucks, it products. It's the $XX center, in think standby some with, We just Australia. data position So good at wide here we're across we areas we're in We've remember, -- something last got But we're and that with the all got million a used, have order for different the all it's business a news our right is or XX major, MTU doing new we've not got looking

that things because us starting come are of to these are Company. to the So of reputation the

as D big is off. So diversification playing the certainly is Tony calls the

Shelley Hulgrave

those $XX interest. leverage annual us in efforts million saved And

amount for So not us. small that is a

Operator

David proceed. next Please line question [Operator of with the Morningstar. Whiston The is Instructions] from

David Whiston

Do number Mercedes that on the this? like London. on to Or the approaching, first that? may deal of start you wanted in be I there anything you have stores with to a cap is anything divest

Roger Penske

this a a XX U.K. point, us the additional centers At we plus that stores it framework agreement a service Mercedes U.K. gives No, in from the the they don't in factory had perspective. have

great in So it shape. puts us

David Whiston

I Okay. for And Is that there's basically entire are problem affordability know else a and going decline? anything on? revenue used Obviously, XX% same-store. is reason that CarShop both vehicle Or there comps with big down in U.S. U.K. the the

Anthony Pordon

affordable our availability being us to it's no, for that the consumers. vehicle related -- It's into get one very, David, very right acquire able and It's plays there just all that model. product out to hard to price product

Roger Penske

eight we brand. goes we we've years, not we continuing open, the deeper. has us side, the the on we stores and the fully sure when talked we're to have going we John that it and But to them. is And vehicle, to that." we the property, scoring the where it's -- say impact When -- right get zero six credit people, the just logistics earlier what's I'm the cost? is plan that. stay formula. question, loaner And that use do used side, can I for up. who interest committed vehicles, OEM can just lot the are What's out talked dig of to to reconditioning tenuous that those taking rates then down and And it's with think you and to a in grow going a situation. dig obviously, but we're And and to of try it's now, and asked But on it, poor up vehicles a said, out. find "Hey, we're business, online have really in not very as right about rebuild buying cars going we down the I the to But earlier to about it deeper, think zero I we then industry to then have U.K. And policy we years, whole we

roll say, when become AI overheads, we issue this and do on what ourselves around creates here I people getting we what individual that clean I call, the the overall then what important why we're handle the think that on of it. to we of We we standpoint Tony. the have what some out lean, this might stores. the money to from the think can I And profitability that's track. corner going take us that really say to to make the because you business these more take time But the want things at make we good that's Would where do. we're want to and any up from

Tony Facione

Absolutely.

Roger Penske

it's not also. U.S., That's in but the just U.K. the In

Tony Facione

working on there project efficiencies to drive the are U.K. big as to the in more automate CarShop guys The well. at a processes

Roger Penske

they're guest past, people Tuesday, appointment the now, drives Sunday can Thursday, transaction a automatically, the and people, with feeling feeling, the they a it or would in -- better to come when car. a people In has on buy the Yes. Saturday better all to Wednesday, out in set come what cars doing up less

particular one time. So these out point, brand we the same in things can also the that build are but at take cost

Tony Facione

that, of the would at not consumers from sourcing away the or things from those more directly curb into might change on consumers. working auctions but the to from buy change really the they is on be what the of buy one necessarily hard David, through vehicles, teams the sell we that of call top So us, we're want buy And to the their that car. sourcing

they're it So instead us, some business. other it for to of party, third evaluating buying we're and to then taking that we're our coming

are our those in So of and profitable cars that then are the store. actually -- most resell buy some can we

bid CarShop U.K., the through business be that. closed normally process and can do that have a the push U.K. get And gone into then So business those franchise would vehicles off-branded the we also, that to to the through we Sytner able have it's auction constant in the that in

in sales are that process more to going It's things that as and challenged. of affordability lot increase just business. drive a there's to in time still is take So efficiencies

David Whiston

understand. I

related opportunity really gotten party the some get You mentioned have there to the trucking for for into terrible, a you logistics. know through industry. everybody business? especially savings I I unique really And Is mean any you angle for guys that's trucking. trucking

Roger Penske

inefficient, years ago just that got Freight, a work. many in three or I think issue that are be and a or really car you bring if look, lot in you're trucking And And cars can't used these order And with have these cars equipment. standpoint the Anchor get and make get country, Well, we couldn't very used to were own vehicles Motor utilization. with all the very to equipment. We overall in up our it's their here business is specialized in of two it to people an throughout costly. invested hauler, picking we cars cars from business,

of -- it silver do go we We to logistics a area. in -- of way enough probably equipment have in when becomes we We play company get start a cars really for have bullet wouldn't market out expensive. have don't that to a because that geographical we more XXX-mile try business some area specialized. wouldn't we that's don't our then And

David Whiston

Correct.

gets is you cash a question. more to the worse, -- keep macro you likely the would want stock? If one situation hoard mantra? king And Okay. would or the Or be cash just to if back macro lot buying

Roger Penske

I at look that. Harding cash, I quite Well, would say honestly. options, trust, our I think we're going to

I at what we the continue do are look is would to what options. think

We certain will a amount CapEx as of necessary. have

this I think understand our year. the market increased times far so should dividend that we've four XX%

we I So the back a at will to continue for the to what's shareholder. decisions. that think look it. being we drive are shareholders, what like will we'll myself, trying Obviously, certainly that our to shareholder pay best And and be

Operator

at There are waiting additional questions no time. this

call to Penske Mr. So, for turn I closing will the over remarks.

Roger Penske

That the call. quarter. Thank participation. and next everyone, the today's Thank of see best. you. you, call end thank you joining concludes for at for your We'll thanks the you the Operator today. All Ana,

your disconnect lines. now may You

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